Vulture: What’s Behind MoviePass’s Latest Power Moves?

Credit MoviePass with continuing to confound Hollywood with grand gestures. Last summer, the app-based ticketing service stunned the industry by slashing its subscription price to just $9.95 — a ludicrously inexpensive and (for the company) certainly unsustainable monthly fee entitling subscribers to see one film a day, every day, at a time when the average ticket price hovers around $9. By early January, its customer base surpassed all expectations, growing to more than 1.5 million subscribers (500,000 added in just three weeks). And with its ticketing said to account for between 3.5 and 12 percent of a given film’s total domestic box-office gross, MoviePass has proven it can lure people back to the theatrical moviegoing experience even at a time ticket sales have been in a death spiral.

But over that same six-month period, AMC, America’s largest theater chain, essentially declared war on MoviePass, castigating the service as a “fringe player,” threatening legal action, and refusing to cut it in on any profits resulting from the surge in attendance MoviePass takes credit for creating. “AMC has no intention, I repeat, no intention, of sharing any — I repeat any — of our admissions revenue or our concessions revenue with MoviePass,” AMC chief executive Adam Aron said during an earnings call late last year.

Then last week MoviePass flipped the script again: At the SundanceFilm Festival, the ticketing service made the unprecedented move of partnering with indie-film distributor the Orchard to buy North American distribution rights to the heist drama American Animals. The $3 million deal is set to include half the film’s prints and advertising costs but, more importantly, also changes the calculus of MoviePass’s business operation by shifting part of its focus to putting out movies — rather than just getting people into theaters to see them. MoviePass followed that power move (under the aegis of a new division called MoviePass Ventures) with a shot across the bow at AMC: Last Thursday, after the theater chain once again rebuffed MoviePass’s call for revenue sharing — specifically, a $3 cut of every ticket and 20 percent of concessions sales — the ticketing app blocked service at ten of the highest-traffic AMC theaters across the country, effectively driving business to AMC’s competitors.

To hear it from MoviePass chief executive Mitch Lowe, however, the service shutdown was more of a tactical display of strength than the onset of combat. Over the last month, he tells Vulture, MoviePass purchased 1 million tickets from AMC. And according to his own back-of-the-envelope estimation, the net result is at least $14 million in additional ticket sales and concessions profits for the theater chain — money that would never have materialized but for MoviePass. “We wanted to let them know that viewers have a choice,” says Lowe. “You can either work with one of the companies that’s reengaging and reenergizing moviegoers. You can get them to spend a lot more money with you. Or you can not work with them. We’d love to work with AMC! We would love to push tons of our customers to their locations.”

He continues: “If you take a small percentage of that increased profit and share it with us, that would ensure that we could continue to drive more activity to the movie theater business. But if you don’t, there are others who would love our business. And in fact, the majority of those subscribers who would’ve gone to AMC went to Regal and Cinemark.”

AMC declined to speak to Vulture but said in a statement: “AMC has taken no action to block the acceptance of MoviePass at our theaters. We have no further comment about MoviePass’s unilateral actions. We are, however, disappointed that MoviePass continues to make false statements about AMC, including recently when MoviePass greatly exaggerated its contributions to AMC’s profitability.”

One unexpected upshot: The partial AMC blackout took many MoviePass subscribers by surprise. And they, in turn, took to Twitter to vent about the unannounced discontinuation of service.